TurboTax LIVE vs CPA: Which Is Better? I Tried Both!

Tax compliance, on the other hand, has to do with preparing your return, filling out forms, and reporting on transactions that have already occurred. But even though they’re easy to use, Turbotax and others are still software programs that have limitations just like any other robot. When your financial picture becomes sufficiently complicated, spending the extra cash to hire a professional can actually save you money in the long run. Here’s my take on when you should ditch the software for an experienced professional.

Using TurboTax vs. hiring a CPA: pros and cons

Income status isn’t the only reason why a tax return can be complicated for some households. You might earn income from different states, which would require different tax returns to be filed. TurboTax is going to charge you separately for each state return you complete and file online. Changes in family structure, especially marriage or divorce, can have a big impact on your taxes as well.

Why Investors Use a CPA to File Taxes

Anyone can be a paid tax return preparer if they have an IRS Preparer Tax Identification Number (PTIN). Tax return preparers have various levels of skills, education, expertise, and credentialing. Choosing a tax preparer shouldn’t be an overly complicated task if you follow the tips provided above.

TurboTax Live Offers Tax Experts to Answer Your Tax Que…

  1. Conversely, platforms like TurboTax or the Tax Solutions mobile app might suffice if you have a linear financial narrative without too many complexities.
  2. Purchasing software like TurboTax is affordable and available at many online and in-person retail stores.
  3. CPAs typically cost more because they put more time into your return, offer personalized advice and are certified and experienced.
  4. TaxSlayer’s Premium or Self Employed versions offer tax assistance, but it’s limited to guidance.
  5. For a basic return, if you take the audit defense package with the added charges, the costs of the tax preparation software vs the CPA are almost identical.
  6. Filing your taxes as a new small business owner for the first time can be stressful or overwhelming.

Fees for filing with an H&R Block tax pro start at $85 (plus $70 for a state tax return). TaxSlayer’s pricing is lower for do-it-yourself tax preparation, which costs up to $67.95 for federal tax filing ($44.95 per state). For example, when other tax software platforms asked the same questions to all users regardless of their tax situation, TurboTax pioneered a “click here if this applies to you” format. Users can select relevant topics—such as moving, marriage, a new job or selling stock—and skip sections that don’t apply to their situation.

Also, they can represent you before the IRS to help you deal with audits or collections. Because of this extensive training and knowledge, a CPA designation is one of the most widely recognized and trusted professional designations in the business world. A CPA also must abide by the AICPA Code of Professional Conduct or risk losing their license. Additionally, CPAs in most states must also work for 1,800 hours under the supervision of a licensed CPA.

You can import all of your QuickBooks data into TurboTax, which saves you a lot of time when composing your expense and depreciation reports. TurboTax automatically imports all your data from the previous year onto the current year’s form, which saves you from a lot of data entry. The software even compares your income from last year to this year, then gives you recommendations that can help you to maximize your refund. This often includes seasonal tax preparers that work in tax stores and IRS Volunteer Income Tax Assistance Program volunteers. Like CPAs and EAs, tax attorneys have unlimited rights to represent a client before the IRS.

For years I’ve saved every piece of mail that says, “Important Tax Document Enclosed” in a big folder to organize later for my accountant. I’ll stare anxiously at this tax folder for weeks until April 1st arrives and things get real. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website. Community reviews are used to determine product recommendation ratings, but these ratings are not influenced by partner compensation. SuperMoney checks for and removes fake reviews when identified.

Whether you’re thinking about hiring a CPA or a tax attorney, it’s important to be proactive. Because CPAs speak the same language as the IRS, they can properly handle your communication with this federal agency. They can help you supply the relevant information requested and resolve your issues as quickly and painlessly as possible. Even if the request seems minor, hiring a CPA to represent you is often a wise move.

During the process, a banner at the top of the screen keeps a running tally of your estimated federal and state refund or amount due. Our TurboTax review looks at where TurboTax excels and how much it costs so you can decide whether you might want to file with it in 2024. Here are some of the pros and cons to consider when choosing TurboTax over the services of an accountant. Is it beneficial to enter everything into turbo tax and see how much the refund/owe will be and then see if a CPA can do better? I’ve always used TT but sold my house and will have cap gains tax.

If you’re wondering, “Should I hire a CPA?”, we’ll further explain what a CPA does, how they can be useful, and answer common questions about these licensed professionals. Our team of experts has earned a reputation for our friendly, approachable style. We go beyond number-crunching to personalized advice, hands-on guidance and a commitment to seeing your business flourish. Honestly, though, if you have the necessary documentation and are confident in the information you have, filing your own taxes isn’t as hard as it seems. If you’re unsure about certain income or whether or not something qualifies you for a deduction, you may want help, but even TurboTax provides assistance (typically included) from a live CPA.

Your small business is likely a pass-through entity, which means your business income is taxed as your personal income. So you still have to fill out a Form 1040, but the process might look very different. If your business is taxed as an S corp or partnership, there are additional tax returns you have to file that your CPA can handle for you.

After trying both TurboTax and a CPA I found my effective tax rate and refund as a self-employed small business owner to be about the same. So, with my back against the wall, I’ll spend hours scanning tax forms and adding up numbers on a Google Doc so that I can present everything to my CPA to file at an exorbitant price. However, you’ll need to upgrade to TurboTax MAX to have a TurboTax pro represent you for the audit. If you place your income into the wrong section, such as self-employment income instead of W-2 income, then TurboTax is going to place your numbers into the boxes you’ve designated.

Having said that, TurboTax LIVE should save you significant money compared to a CPA. You must provide each with your income figures, your receipts, your bills, and miscellaneous statements to provide a clear picture of your finances for the tax year. Most people will need to pay for both services, in way or another. Today’s tax preparation software is intuitive and user-friendly. And, in some cases, it’s just a consumer-friendly version of the same tax software that your CPA uses. Purchasing software like TurboTax is affordable and available at many online and in-person retail stores.

As the number and magnitude of decisions you have to make grows, professional expertise can become very helpful to see the picture clearly. Over time, thoughtful planning becomes necessary turbotax vs cpa if you want to minimize the amount you fork over to Uncle Sam, and its simply a job that computers can’t handle. The preparation and filing of your return is a very operational job.

If you’re starting a small business, switching to a CPA could help maximize your savings. Join a community of like minded Financial Mutants as we accelerate our wealth building process and have fun while doing it. If you’re ever in doubt though, there’s always a professional CPA ready and willing to help. If you don’t qualify for a free program, the costs might be higher than you’d expect.

The IRS is experiencing significant and extended delays in processing – everything. When you work on your tax return on TurboTax, the majority of the burden is on you. When you hire a CPA to do your tax return, they handle the burden for you. TurboTax’s range is $0 (if you meet certain criteria) to $345, while DiMercurio Advisors, for example, starts at $500 per individual tax return.

Most people only think of hiring a CPA when they prepare their tax return. While CPAs can provide valuable tax advice on how to prepare your return, they can also provide https://turbo-tax.org/ year-round tax advice. Generally, this means a return with W-2 income, claiming the standard deduction and potentially the earned income tax credit and child tax credit.